Question

At the end of its first year, what was the trial balance of Blossom Company?

Answer 1

The firm's accounting profit is calculated by subtracting the costs for labor, capital, and materials from the sales revenue. In this scenario, the firm's accounting profit would be $50,000.

Step-by-step explanation:

The student's question asking for the trial balance of Blossom Company at the end of its first year pertains to the subject of accounting, particularly focusing on a firm's financial statements, which falls under the broader category of Business. To address the inquiry about the firm's accounting profit, we use the following calculation:

Sales Revenue - (Labor Costs + Capital Costs + Material Costs) = Accounting Profit

In this case, the firm had sales revenue of $1 million. The costs include $600,000 for labor, $150,000 on capital, and $200,000 on materials. Thus, the accounting profit would be calculated as follows:

$1,000,000 - ($600,000 + $150,000 + $200,000) = $1,000,000 - $950,000 = $50,000

The firm's accounting profit is $50,000

Answer 2

The trial balance of Blossom Company at the end of its first year was $25,800.

Step-by-step explanation:

The initial Equipment value of $21,500 remains unchanged. To find the trial balance, we add the depreciation for the year ($4,300) to the Equipment value, giving us $25,800. This represents the adjusted value of the Equipment after factoring in the depreciation expense.

Depreciation expense and Accumulated Depreciation aren't initially reflected in the trial balance, but the estimated depreciation of $4,300 needs to be accounted for. Accumulated Depreciation would increase by this amount, representing the total depreciation incurred during the year, while Depreciation Expense would also rise by the same amount, as it's an expense recognized in the income statement. These accounts would be used to adjust the trial balance figures.

In essence, the trial balance doesn't directly capture accumulated depreciation or depreciation expense, which necessitates adjustment when computing the overall financial position. The increase in Accumulated Depreciation and Depreciation Expense by $4,300 each accounts for the depreciation incurred, leading to the final trial balance of $25,800.

Complete question:

At the end of its first year, the trial balance of Blossom Company shows Equipment $21,500 and zero balances in Accumulated depreciation equipment and depreciation expense. Depreciation for the year is estimated to be $4,300. What was the trial balance of Blossom Company?